New Lend Lease fund will have up to $350mln-plus in property

Lend Lease Group
has launched a new wholesale fund that will invest in regional shopping centres and commercial property after receiving investor commitments totalling $218 million.

The fund, to be named Lend Lease Real Estate Partners 3, will make its investments over the next 12 month, taking advantage of opportunities that emerge in a weak market.

It will focus on sectors where Lend Lease has expertise and aim to enhance returns for its wholesale investors over its six year life.

With target gearing of 30 per cent to 50 per cent, the fund will be able to invest more than $350 million, Lend Lease said in a statement on Monday.

“The vehicle is designed to bring like-minded investors together to take advantage of the current low point in the property cycle," Lend Lease chief executive and managing director
Steve Mc
Cann said.

“Our ability to attract and bring together global investment partners in the current climate is testament to the reputation Lend Lease enjoys in the wholesale property investment sector."

The fund, which is is the third investment vehicle in the Lend Lease Real Estate Partners series, is expected to take part in the Lend Lease-led consortium last week announced as the preferred bidder to acquire the 14 assets of the $1.4 billion ING Retail Fund.

Lend Lease says the fund builds on the group’s Australian platform of wholesale property funds, including Australian Prime Property Fund Series covering the retail, commercial and industrial sectors.

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Meanwhile, Lend Lease on Monday also said it will make ongoing payments totalling hundreds of millions of dollars to the NSW state government as part of its contract to develop Sydney’s Barangaroo site.

The first payments will provide the government with $100 million over the first 18 months of the project.

The developer also said it will make an additional payment to the government based on a share of the project’s financial success after completion.

Lend Lease was named by NSW Premier Kristina Keneally on Sunday as developer of the $6 billion stage one of the Barangaroo project.

The 22-hectare site, on the north-eastern edge of Darling Harbour, will be developed to include office towers, residential apartments, shopping precincts and a park.

Lend Lease said on Monday it had executed a conditional contract with the Barangaroo Delivery Authority and it expects to fulfill all outstanding conditions by early 2010.

To secure the development rights, the company agreed to make a series of payments worth “several hundred million dollars" to the NSW government over eight years, beginning with $100 million over the first 18 months.

The company is to make an additional payment to the government based on the financial success of the infrastructure and amenities it develops.

Stage one of the project relates to 7.5 hectares of the site, providing over 430,000 square metres of new floor space 2.6 hectares of public and open spaces.

Nearly one kilometre of the Sydney Harbour foreshore will be re-opened to public access.

Construction is expected to commence in late 2010, and completed in 10 to 15 years.